Cover Story: The writing on the wall

Fears are growing that an era of cheap and easy credit for emerging market companies and nations has drawn to a close. What comes next is unlikely to be pretty

By Katie Llanos-Small and Taimur Ahmad

As the year began, it seemed there could hardly have been a
better time to be a borrower in Latin America.

By January, the average yield on 10-year emerging market
dollar bonds had dropped to its lowest ever level – at
4.5%, it was trading at an unprecedented 2.5 percentage-point
premium over US Treasuries. And in the first months of the
year, borrowers of all stripes – from Bolivia to
Honduras – piled into the debt capital markets to take
advantage of the historically cheap funding.

For many, the challenge was how to lock in the cheapest
rates in an environment where funding costs were dropping by
the day.

"It’s very hard to say that you’ve
issued a very good transaction because you never know if
tomorrow or the day after someone else will come and issue even
more cheaply," said Jayme Fonseca, CFO of...